BILL NUMBER: AJR 77	CHAPTERED  09/18/00

	RESOLUTION CHAPTER   153
	FILED WITH SECRETARY OF STATE   SEPTEMBER 18, 2000
	ADOPTED IN SENATE   SEPTEMBER 1, 2000
	ADOPTED IN ASSEMBLY   AUGUST 31, 2000
	AMENDED IN ASSEMBLY   AUGUST 31, 2000

INTRODUCED BY   Assembly Member Keeley
   (Coauthor:  Senator Alpert)

                        AUGUST 30, 2000

   Assembly Joint Resolution No. 77--Relative to electricity rates.


	LEGISLATIVE COUNSEL'S DIGEST


   AJR 77, Keeley.  Electricity rates.
   This measure would direct the Electricity Oversight Board, working
with the Public Utilities Commission, to petition the Federal Energy
Regulatory Commission to modify the Independent System Operator
tariffs to require that the prices in the energy and ancillary
services markets are just and reasonable, as prescribed.  The measure
would require the Public Utilities Commission, in consultation with
the board, to investigate the most effective mechanisms to protect
consumers from price volatility, energy exports, and unreasonably
high prices caused by an uncompetitive market.  The measure would
direct the commission, by September 21, 2000, to issue a prescribed
order.




   WHEREAS, The average wholesale price of electricity, since June
2000, has increased by 270 percent compared to the same period in
1999, and neither growth in the demand for electricity nor increases
in natural gas prices can justify these extraordinary price
increases; and
   WHEREAS, These extraordinarily high electricity costs are
threatening the economic well-being of California consumers and
businesses, and the financial viability of the electrical
corporations that serve them, and there is an immediate and severe
impact on the California economy as a result of the dysfunctioning
wholesale electric markets; and
   WHEREAS, The Federal Energy Regulatory Commission (FERC) has
recognized the crisis facing California and has begun a formal
investigation into the wholesale markets serving California consumers
and businesses, and as part of this investigation, FERC has
established processes that could result in the issuance of refunds
for prices that are found to be unjust and unreasonable; and
   WHEREAS, The Legislature appreciates this important step by FERC,
but finds that the harm to electric consumers and businesses is too
great to rely solely on the potential for refunds; and
   WHEREAS, It is necessary to act now to ensure that only costs that
are just and reasonable are passed through to consumers; and
   WHEREAS, The states of New England have recognized the need to
protect consumers from market imperfections by incorporating a market
monitoring and correction function, which allows prices to be
reviewed and reset whenever market prices diverge from the levels
expected from functioning competitive markets; and
   WHEREAS, It is useful to build on the experiences of other states
in deciding how best to proceed; now, therefore, be it
   Resolved by the Assembly and Senate of the State of California,
jointly, That the Electricity Oversight Board, working with the
Public Utilities Commission, shall petition FERC to modify the
Independent System Operator (ISO) tariffs to require that the prices
in the energy and ancillary services markets are just and reasonable
whether they result from the operation of these markets or other
mechanisms.  Whenever the Electricity Oversight Board finds that
prices diverge from prices that are just and reasonable, the
Electricity Oversight Board, in consultation with the Public
Utilities Commission, shall recommend to FERC and the Independent
System Operator those remedial actions, including the retroactive
recalculation of the market-clearing price to just and reasonable
levels as may be necessary to achieve fair and reasonable wholesale
prices; and be it further
   Resolved, That the Public Utilities Commission, in consultation
with the Electricity Oversight Board, shall investigate the most
effective mechanisms to protect consumers from price volatility,
energy exports, and unreasonably high prices caused by an
uncompetitive market.  The Electricity Oversight Board shall direct
the Independent System Operator to show cause why the price caps in
the ancillary services and real-time energy markets should not be
lowered to $100 per megawatt-hour immediately and continue until at
least March 31, 2001.  The board shall report back to the Legislature
by December 1, 2000, regarding price caps in the ancillary services
and real-time energy markets and be it further
   Resolved, That the Public Utilities Commission, on or before
September 21, 2000, shall issue an order instituting an investigation
to review the impact of the current electricity crisis on consumers
and those electrical corporations subject to the "Section 368(a) rate
freeze," with emphasis on the options for correcting the electricity
market, methods to eliminate price volatility for consumers, and
methods of cost recovery and cost allocation; and be it further
   Resolved, That the Chief Clerk of the Assembly transmit copies of
this resolution to the President and Vice President of the United
States, to the Speaker of the House of Representatives, to each
Senator and Representative from California in the Congress of the
United States, the Chair of the Federal Energy Regulatory Commission,
the Chair of the Electricity Oversight Board, the Chair of the
Independent System Operator governing board, and the President of the
Public Utilities Commission.
